Planning appeal could affect investment pitch, writes Jamie Smyth, Technology Reporter

An Taisce's decision to appeal the planning permission granted for an Intel chipmaking plant in Leixlip could further complicate IDA Ireland's pitch to win a new €2 billion investment project.

The appeal is certain to delay any future development on Intel's Leixlip site for several months and may add uncertainty to local managers' discussions with its parent on an investment.

Intel Group is constantly evaluating sites to host its new generation of wafer fabrication plants that produce microprocessors, which act as the brains of PCs and other electronic devices.

The firm refuses to discuss its investment plans but speculation is mounting in the sector that it will announce a new fabrication plant within months.

Until this year its campus in Leixlip has performed extraordinarily well in fending off competition from competing Intel sites in Israel and the US to win a series of high-profile chip investments.

Intel Ireland now directly employs more than 3,600 people and last year completed the construction of Fab 24, a plant using the latest 90 nanometre chip manufacturing technology.

It is scheduled to complete an extension to this plant, Fab 24-2, early next year and is already competing within the Intel Group to secure the next big investment.

But there are signs that Ireland's competitiveness as a location for big chipmaking plants is coming under threat from a number of diverse factors.

Intel Ireland's managers cite rising construction costs as a key issue affecting their ability to invest in the Republic.

A decision by the European Commission this year not to allow state grants worth €170 million for Intel to encourage new investment has also removed a key weapon from the IDA's investment armoury.

In this context, An Taisce's decision to appeal the planning permission granted by Kildare County Council will undoubtedly disappoint Intel. The flexibility of the Irish Government and the investment agencies is often a key factor cited by firms choosing to locate in Ireland.

Delays caused by planning appeals lodged by An Taisce to investment projects, regardless of how well-founded the appeals, could give key advantages to Ireland's competitors for projects.

There are also signs that Ireland's extremely competitive 12.5 per cent corporate tax rate may not be the draw that it once was.

Earlier this week Intel announced it had chosen Arizona as the location for a new generation of chip plants based on 45 nanometre technology. It cited a new law in Arizona that allows the firm to claim large tax breaks on any capital projects worth more than $1 billion as a key element in its investment decision.

A range of US and European media have speculated that Ireland was a potential competitor for the investment. Intel refuses to confirm or deny whether Ireland was even in the race for the $3 billion plant.

But Intel, and the entire technology industry, will view An Taisce's renewed interest in appealing planning decisions on major capital investments with unease.